Financial and Managerial Accounting (Looseleaf) (Custom Package)
Financial and Managerial Accounting (Looseleaf) (Custom Package)
6th Edition
ISBN: 9781259754883
Author: Wild
Publisher: MCG
Question
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Chapter 9, Problem 6PSB
To determine

Journal Entries:

Journal is the book for recording financial transactions in chronological order. It is the first step of accounting. In this process each transaction has two sides- debit side and credit side. Total of debit side must be equal to total of credit side.

Accounting rules for journal entries:

  • To increase balance of the account: Debit assets, expenses, losses and credit all liabilities, capital, revenue and gains.
  • To decrease balance of the account: Credit assets, expenses, losses and debit all liabilities, capital, revenue and gains.

1.

To record: Journal entries for June and July.

Expert Solution & Answer
Check Mark

Explanation of Solution

Given:
Number of employees are 5.
Salary per month of each employee is $1,600.
FICA Social security taxes payable are $992.
FICA Medicare taxes payable are $232.
Employees Federal income tax payable is $ 1,050.
Federal Unemployment taxes are $66.
State Unemployment taxes are $440.

Journal entries for June and July.

    Date
    Account Title and Explanation
    Post ref
    Debit($)
    Credit($)
    July 31
    Salaries expenses

    8,000


    FICA Social security taxes payable


    496

    FICA Medicare taxes payable


    116

    Federal income Taxes


    1,050

    Federal Unemployment taxes


    33

    State Unemployment taxes


    220

    Salaries Payable


    6,085

    (To record accrued payroll)



                                                                     Table (1)

  • Salaries expenses are an expense account. Its balance is increasing So it is debited.
  • FICA Social security taxes payable is a liability account. Since it is increasing, it is credited.
  • FICA Medicare taxes payable is a liability account. Since it is increasing, it is credited.
  • Federal income Taxes are a liability account. Since it is increasing, it is credited.
  • Federal Unemployment tax is a liability account. Since it is increasing, it is credited.
  • State Unemployment taxes are a liability account. Since it is increasing, it is credited.
  • Salaries Payable is a liability account. Since it is increasing, it is credited.
    Date
    Account Title and Explanation
    Post ref
    Debit($)
    Credit($)
    March 15
    FICA Social security taxes payable

    992


    FICA Medicare taxes payable

    232


    Federal income Taxes

    1,050


    Bank


    2,274

    (To record taxes paid)



                                                                     Table (2)

  • FICA Social security taxes payable is a liability account. Since company is paying off this liability, its balance is decreasing. Hence, it is debited..
  • FICA Medicare taxes payable is a liability account. Since company is paying off this liability, its balance is decreasing. Hence, it is debited.
  • Federal income Taxes are a liability account. Since company is paying off this liability, its balance is decreasing. Hence, it is debited.
  • Bank is an asset account. Since company is paying off the liabilities, the balance of bank reduces. Hence it is credited.
    Date
    Account Title and Explanation
    Post ref
    Debit($)
    Credit($)
    March31
    Office Salaries expenses

    3,800


    Shop Salaries expenses

    4,200


    FICA Social security taxes payable


    496

    FICA Medicare taxes payable


    116

    Federal income Taxes


    1,050

    Salaries Payable


    6,338

    (To record accrued payroll)



                                                                     Table (3)

  • Office Salaries expenses is an expense account. Its balance is increasing So it is debited.
  • Shop Salaries expenses is an expense account. Its balance is increasing So it is debited.
  • FICA Social security taxes payable is a liability account. Since it is increasing, it is credited.
  • FICA Medicare taxes payable is a liability account. Since it is increasing, it is credited.
  • Federal income Taxes are a liability account. Since it is increasing, it is credited.
  • Salaries Payable is a liability account. Since it is increasing, it is credited.
    Date
    Account Title and Explanation
    Post ref
    Debit($)
    Credit($)
    March 31
    Salaries Payable

    6,338


    Bank


    6,338

    (To record taxes paid)



                                                                     Table (4)

  • Salaries Payable is a liability account. Since company is paying off this liability, its balance is decreasing. Hence, it is debited.
  • Bank is an asset account. Since company is paying off the liabilities, the balance of bank reduces. Hence it is credited.
    Date
    Account Title and Explanation
    Post ref
    Debit($)
    Credit($)
    June31
    Payroll taxes expenses

    612


    FICA Social security taxes payable


    496

    FICA Medicare taxes payable


    116

    (To record accrued payroll)



                                                                     Table (5)

  • Payroll taxes expenses is an expense account. Its balance is increasing So it is debited.
  • FICA Social security taxes payable is a liability account. Since it is increasing, it is credited.
  • FICA Medicare taxes payable is a liability account. Since it is increasing, it is credited.
    Date
    Account Title and Explanation
    Post ref
    Debit($)
    Credit($)
    July 15
    FICA Social security taxes payable

    992


    FICA Medicare taxes payable

    232


    Federal income Taxes

    1,050


    Bank


    2,274

    (To record taxes paid)



                                                                     Table (6)

  • FICA Social security taxes payable is a liability account. Since company is paying off this liability, its balance is decreasing. Hence, it is debited..
  • FICA Medicare taxes payable is a liability account. Since company is paying off this liability, its balance is decreasing. Hence, it is debited.
  • Federal income Taxes are a liability account. Since company is paying off this liability, its balance is decreasing. Hence, it is debited.
  • Bank is an asset account. Since company is paying off the liabilities, the balance of bank reduces. Hence it is credited.
    Date
    Account Title and Explanation
    Post ref
    Debit($)
    Credit($)
    July 15
    SUTA Taxes

    440


    Bank


    440

    (To record taxes paid)



                                                                     Table (7)

  • SUTA Taxes is a liability account. Since company is paying off this liability, its balance is decreasing. Hence, it is debited.
  • Bank is an asset account. Since company is paying off the liabilities, the balance of bank reduces. Hence it is credited.
  • Date
    Account Title and Explanation
    Post ref
    Debit($)
    Credit($)
    July 31
    FUTA Taxes

    66


    Bank


    66

    (To record taxes paid)



                                                                     Table (8)

  • FUTA Taxes is a liability account. Since company is paying off this liability, its balance is decreasing. Hence, it is debited.
  • Bank is an asset account. Since company is paying off the liabilities, the balance of bank reduces. Hence it is credited.

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Chapter 9 Solutions

Financial and Managerial Accounting (Looseleaf) (Custom Package)

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